–Mr. Suderman, what exactly is the “Welfare State”?

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Mitchell’s laws:
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●The more federal budgets are cut and taxes increased, the weaker an economy becomes. .
Liberals think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.
●Austerity is the government’s method for widening
the gap between rich and poor.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Everything in economics devolves to motive,
and the motive is the Gap.

Peter Suderman is a senior editor at Reason magazine and Reason.com, where he writes regularly on health care, the federal budget, tech policy, and pop culture. He is also a film critic for The Washington Times.

So many areas of expertise — we are not sure which one he accessed when he wrote the following article: How Obama’s 529 College Tax Plan Debacle Proves the Welfare State is Doomed

We knew there was going to be a problem with the article, when we saw the sub-head: “Someone has to pay for it—but no one wants to foot the bill.”

Oh dear, another expert who is completely wrong about Monetary Sovereignty.

Anyway, we’ll skip the first 11 paragraphs, which are devoted to the Obama administration’s stupidity in recommending the taxation of 529 college savings plans, and get to the “Welfare State” stuff:

. . . this is the sort of plan than inevitably follows from the long-term fiscal logic of the welfare state.

Yes, the budget wars have calmed recently as annual deficits have fallen and the economy has improved. But total national debt remains at historic highs, and medium to long-term budget prognosis is still rather grim.

First, the term “welfare state” is a pejorative for what every government in history has done and should do. In some form or another, the purpose of government is to provide welfare to its people, especially those people who need it most.

In the eyes of a right-winger, ANY government spending constitutes that horrible “welfare.” (How did such a loving term come to be a pejorative, anyway?)

Let me correct that. For the right wing, any government spending that benefits the poor and middle-income people is termed “welfare. Spending that benefits the rich is perfectly acceptable and absolutely deserved.

So, because the U.S. government does exactly as it should — spends money that benefits the poor and middle-income people (aka the 99%) — the U.S. now has become a “welfare state.”

And then there is the prognosis, which supposedly is “grim,” only because our Monetarily Sovereign government is doing exactly what a Monetarily Sovereign government should do: Add dollars to the economy, in support of the 99%, to stimulate economic growth.

Perhaps Mr. Suderman, in his duties as budget writer and film critic, prefers the U.S. to follow the “successful” euro austerity system, in which the goal is to eliminate deficits by starving the non-rich citizenry, thus widening the Gap between rich and poor.

The core of the problem is clear: the growing cost of the entitlement state.

Ah, now it not only is a “welfare state” but an “entitlement state.” Mr. Suderman wrings his hands that people receive Social Security, Medicare, Medicaid and educational, housing and other poverty aids.

Far better that the rich receive massive tax breaks. Consider FICA and sales taxes, which are a tiny fraction of the income the rich receive, but a huge portion of the 99%’s income. Yes, this is an entitlement state — for the rich.

As the Congressional Budget Office warned earlier this week, over the next decade, “spending will grow faster than the economy for Social Security; the major health care programs, including Medicare, Medicaid, and subsidies offered through insurance exchanges; and net interest costs.”

Tax revenues will stay essentially flat at around 18 percent of GDP, while spending, driven by entitlements, will rise to more than 22 percent of GDP. Longer-term projections indicate the cost of entitlements and interest on the debt will continue to rise in the decades after that.”

Oh woe! The government will add more dollars to the economy via spending, than it removes from the economy via taxing.

This is what the CBO “warned.” Warned? Is an economic stimulus something to be “warned” about?

In the bigger picture, the existing welfare state is unaffordable. Either it will have to be cut, or reformed, or paid for—by someone, somehow.

And there it is: The Big Lie, in all it’s malevolence. No, Mr. Suderman. The existing “welfare” state in not unaffordable. The federal government, being Monetarily Sovereign, never can run short of dollars to pay its bills.

And those bills never are paid by “someone, somehow.” They are paid by the federal government, which creates all the needed dollars ad hoc.

Which means that eventually, anyone looking for ways to keep the welfare state afloat will have to go after after the middle class—and, in particular, middle class savers. That’s where the money is. Sure, you can imagine alternatives, like a Value Added Tax (VAT)

In the 1% world, the goal is to widen the Gap between the rich and the rest. The Gap is what makes them rich, and the wider the Gap, the richer they are.

So indeed, “go after the middle class,” and indeed create a regressive tax like VAT. What better ways to widen the Gap on behalf of the rich?

. . . that’s the reality of, well, middle class economics.

No, Mr. Suderman, that’s the fantasy of rich man’s economics — the phony claim that in some unknown way, federal deficits are an unsustainable burden on taxpayers, when in fact federal deficits are a necessary benefit to all Americans.

We’ll close with excerpts from a January 31, 2015 article in the Sun Sentinal:

“Until he (Obama) gets serious about our long-term spending problem, it’s hard to take him seriously,” said Cory Fritz, a spakesman for House Speaker John Boehner, Republican -Ohio.

Republicans prefer shifting te money around — aideing the Pentagon by cutting into the vast system of domestic programs they say is bloated. They have suggested cuts to food stamps, the Affordable Care act and programs to help homeowners who owe more on their mortgages than their home are worth, among others.

Right. Shift money from “unsustainable” benefits to the 99%, so you can benefit the wealthy corporate managers and shareholders of war materiel manufacturers.

That would be perfect solution to Mr. Suderman’s “welfare state.”

Rodger Malcolm Mitchell
Monetary Sovereignty

Ten Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Federally funded Medicare — parts A, B & D plus long term nursing care — for everyone (Click here)
3. Provide an Economic Bonus to every man, woman and child in America, and/or every state a per capita Economic Bonus. (Click here) Or institute a reverse income tax.
4. Free education (including post-grad) for everyone. Click here
5. Salary for attending school (Click here)
6. Eliminate corporate taxes (Click here)
7. Increase the standard income tax deduction annually. (Refer to this.)
8. Tax the very rich (.1%) more, with higher, progressive tax rates on all forms of income. (Click here)
9. Federal ownership of all banks (Click here and here)

10. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)

The Ten Steps will add dollars to the economy, stimulate the economy, and narrow the income/wealth/power Gap between the rich and the rest.

10 Steps to Economic Misery: (Click here:)
1. Maintain or increase the FICA tax..
2. Spread the myth Social Security, Medicare and the U.S. government are insolvent.
3. Cut federal employment in the military, post office, other federal agencies.
4. Broaden the income tax base so more lower income people will pay.
5. Cut financial assistance to the states.
6. Spread the myth federal taxes pay for federal spending.
7. Allow banks to trade for their own accounts; save them when their investments go sour.
8. Never prosecute any banker for criminal activity.
9. Nominate arch conservatives to the Supreme Court.
10. Reduce the federal deficit and debt

No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia.
1. A growing economy requires a growing supply of dollars (GDP=Federal Spending + Non-federal Spending + Net Exports)
2. All deficit spending grows the supply of dollars
3. The limit to federal deficit spending is an inflation that cannot be cured with interest rate control.
4. The limit to non-federal deficit spending is the ability to borrow.

Monetary Sovereignty

Monetary Sovereignty

Vertical gray bars mark recessions.

As the federal deficit growth lines drop, we approach recession, which will be cured only when the growth lines rise. Increasing federal deficit growth (aka “stimulus”) is necessary for long-term economic growth.


10 thoughts on “–Mr. Suderman, what exactly is the “Welfare State”?

  1. “How did such a loving term come to be a pejorative, anyway?”

    Welfare is an important word in the US Constitution. It is therein declared that one of the few listed purposes of our government is to “promote the general welfare”.

    The word became a pejorative when it was used as a name for programs that promoted the specific welfare of certain people, at the expense of others. (I know, I know, we — not all of us, but a precious few of us Americans — realize now that there is no expense imposed upon others, but that is how it became a pejorative.)

    Maybe MS or MMT can come up with a better word for it.


  2. I hope you have sent it through to him!
    These dickheads need to be set straight.
    Even without them acknowledging you they will be forced to choose since it will no longer be a fait accompli to spout the nonsense.


  3. The leftists are winning.

    Remember Obama chanting “yes we can”? Well, take a look at Siriza, take a look at Podemos in Spain. The same line.

    My take. Nations in decadence pick extreme radical parties, 99% on the left. Greece will prove it and so will Spain.

    When it happens, we will be talking about how they didn’t “do enough”…


  4. 5 minute video about the Bank of Canada’s winning the right to spend money without issuing Treasuries. It’s worth a listen.


  5. The text he shows on the screen doesn’t jibe with his narrative. It says the Bank of Canada may lend money to the government, not “spend money without issuing Treasuries”. And it says the government must repay such loans within a very short time, 15 months at maximum, depending on when they were made during the fiscal year. There are also limitations on the purposes of the loans, and on their size, 33% (Federal) or 25% (provincial) of the annual budget.

    This case won’t stop the issuance of bonds, if the government(s) run deficits.

    It’s not a bad idea, but it’s not very important either. It’s not “debt-free money”, it’s more like bridge loans.


    1. golfer, you’re right, sort of, and not right, kind of.

      There actually are two parts to the story.

      Part 1. BOC lending, rather than giving, dollars to provinces and even the federal government. You’re right. This is dopey.

      Part 2. The government no longer issuing bonds. This is important, because it somewhat removes the word “debt” from the conversation.

      But the big part is the possible realization that yes, the government of Canada can spend without asking taxpayers for dollars. If people start to understand that, the jig will be up for the rich.


      1. But, when these short-term loans authorized by the law mature, the government must repay the money from taxes or borrowing. The law doesn’t allow for rolling over, but even if they fudged that, there is the limit on the amount of these loans as a percentage of the budget. Continuous deficit spending of any significance would quickly exceed that limit.

        Whether or not they issue a bond to BOC when they do this, it is still a debt — a loan — that must be repaid. They don’t really realize their monetary sovereignty in this law, no matter how much the “positive money” people who made the video say they do.


        1. Yes, they still are screwing around with borrowing, but it’s the discussion that I’m hoping for.

          If enough people ask, “Well, how do they do this, if before they had to do that?” the subject of sovereignty can emerge and an explanation ensue.

          Maybe this along with Stephanie Kelton on the U.S. Senate budget team, will move the conversation from point A. to point B.

          Or not.

          I’ve had my hopes dashed before.


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